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From April 2025, new regulations will increase company size thresholds and eliminate certain requirements from the Directors’ Report.

The government has introduced new legislation to raise the monetary size thresholds for micro, small, and medium-sized entities. The aim of the uplift is to simplify reporting requirements, reduce reporting complexity for companies, and adjust for inflation since the thresholds were last set in 2013.

Who Will the New Thresholds Apply To?

• Micro entities
• Small entities
• Medium entities
• LLPs

It is important to note the increased thresholds will also apply to limited liability partnerships (LLPs) via amendments to the regulations which govern them.

What are the new monetary size thresholds, effective April 2025?

The below table outlines the new thresholds effective April 2025. These thresholds will apply for a financial year if any two of the three criteria are met.

The legislation introduces a transitional provision for the “two-year consecutive rule.” When determining company size for financial years beginning on or after 6 April 2025, companies can assume the new thresholds were in place for the previous year. This look-back provision applies solely to the two-year rule, allowing companies and LLPs to benefit from the threshold increase as soon as the legislation takes effect.

Directors’ Report requirements – what is changing?

To further reduce the UK’s regulatory burden, particularly in non-financial reporting, the new regulations eliminate several outdated or overlapping requirements from the Directors’ Report.

If you are a large or medium-sized entity, you will no longer need to include information on:

• Financial instruments;
• Significant events occurring after the financial year-end;
• Expected future developments;
• Research and development;
• Overseas branches;
• Employment of disabled people (this requirement is also being removed for small entities);
• Employee engagement; and
• Engagement with customers and suppliers.

For more details on these changes, refer to the government’s explanatory memorandum.

Coming Soon: Further Measures 

Further measures will be introduced through separate secondary legislation and this is expected to be announced early 2026. These measures are being introduced to eliminate overlapping EU-origin reporting requirements from the Directors’ Remuneration Report, in addition to addressing technical issues in the audit regulatory framework.

About Arnold Hill & Co LLP 

Arnold Hill & Co LLP is an accountancy and tax firm who have been delivering tailored accountancy services for over a century. Based in the heart of London, the firm is built on strong, lasting relationships and combine tradition with a forward thinking approach to meet the evolving needs of clients, both across the UK and internationally. The firm advise a range of clients ranging from UHNWI’s, family offices and entrepreneurs to growing businesses and multinational groups.

Leanne Konopka - Partner